Alibaba profit plunges 75% as AI spending surges

Aug 20, 2026

Alibaba Group Holding Ltd.'s net income plunged 75% to 10.5 billion yuan ($1.6 billion) in the June 2026 quarter, driven by a 75% surge in capital expenditure to 67.7 billion yuan for AI infrastructure. Despite a broad Chinese consumption slowdown, revenue rose 9% to 268.95 billion yuan, supported by a 45% increase in cloud division revenue. The company also expanded its AI portfolio with the Qwen3.8 model releases.

Alibaba quarterly profit decline

▪Alibaba Group Holding Ltd.'s revenue rose 9% year-on-year to 268.95 billion yuan for the quarter ending June 30, 2026, slightly exceeding analyst estimates.
▪Alibaba Group Holding Ltd.'s U.S.-listed shares fell approximately 3% to 4% in trading on August 20, 2026, following the release of its quarterly financial results.
▪Alibaba Group Holding Ltd. registered a free-cash outflow of more than $6.6 billion in the quarter ending June 30, 2026, due to rising AI project and infrastructure costs.
▪Alibaba Group Holding Ltd.'s net income fell 75% year-on-year to 10.5 billion yuan ($1.6 billion) for the quarter ending June 30, 2026.

AI infrastructure capital expenditure

▪Alibaba Group Holding Ltd. raised prices for its AI computing and storage products by up to 34% in March 2026 amid surging demand.
▪Alibaba Group Holding Ltd.'s capital expenditure rose 75% year-on-year to 67.7 billion yuan ($10 billion) in the quarter ending June 30, 2026, driven by CPU-compute capacity expansion and higher chip prices.

Cloud division revenue growth

▪Alibaba Group Holding Ltd.'s revenue rose 9% year-on-year to 268.95 billion yuan for the quarter ending June 30, 2026, slightly exceeding analyst estimates.
▪Alibaba Group Holding Ltd.'s AI-related product revenue achieved triple-digit year-on-year growth for the twelfth consecutive quarter as of June 30, 2026, according to CEO Eddie Wu.

Qwen AI model releases

▪Alibaba Group Holding Ltd. released its Qwen3.8-Max AI model in August 2026, claiming it delivered comparable or better performance scores than Anthropic's Fable 5.
▪Alibaba Group Holding Ltd. released its Qwen3.8-27B AI model in August 2026, designed to run on consumer hardware like laptops for coding and research tasks.

China consumption slowdown

▪Alibaba Group Holding Ltd.'s profit decline in the quarter ending June 30, 2026, occurred while the company grappled with a broad Chinese consumption slowdown.
▪Alibaba Group Holding Ltd. faced intensifying competition in the Chinese technology sector across chips, cloud infrastructure, and artificial intelligence models as of August 2026.